Australia's new Energy Minister, Chris Bowen, vowed on Thursday to take necessary action to ensure reliable and affordable energy supply amid a "perfect storm" that has sent domestic wholesale prices of power and gas soaring.
This week, Australia's energy market operator capped wholesale gas prices in southern states and activated for the first time a guarantee mechanism to call on more gas supply, as heating demand spiked amid a cold snap.
It also urged gas-fired power plants to cover coal plant outages.
The government could also invoke a more drastic policy, the domestic gas security mechanism, to require east coast suppliers of liquefied natural gas (LNG) to hold back some exports for the domestic market.
However, Bowen said the gas security trigger was not easy to pull and would not help the current gas shortage, as it involves an annual review that would not take effect until Jan. 1.
"It is not a short-term answer," Bowen said at his first media conference since being sworn in on Wednesday.
The gas security mechanism, designed by the previous government to consider annual balances of supply and demand, also requires prior consultations with industry and regulators.
Bowen did not rule out any particular options to resolve the gas crunch, but said he would wait to hear from energy regulators next week before deciding on the next steps.
"It is not necessarily going to get better straight away," Bowen said, when asked whether the soaring wholesale prices would feed through to households.
Gas producers in the northeastern state of Queensland have responded to the emergency call for extra supply down south, but the pipeline delivering that gas has reached full capacity, the Australian Energy Market Operator said on Thursday.
"Supplies remain tight," an AEMO spokesperson said.
Australia's second largest independent producer, Santos Ltd, said years of protests against new gas projects had slowed developments that could have averted a crisis.
"We don't have gas we can just turn on," chief executive Kevin Gallagher told reporters.
Big gas users are warning of potential business closures and job losses. A butchers' cooperative in South Australia said monthly gas costs at a plant in Adelaide had jumped from AU$135,000 ($97,000) to AU$900,000 and were still climbing.
"The escalating energy crisis for Australian business risks far-reaching consequences for both the broader economy and individual households," Melina Morrison, chief executive of the Business Council of Co-operatives and Mutuals, said in a statement.
